Burberry Group Plc: Quarterly Sales Growth Exceeds Expectations

Burberry Group plc, a global luxury-fashion company reported quarterly comparable sales growth that exceeded the expectations of Wall Street analysts.

Burberry’s stock price slightly increased to $49.94 per share at the time of this writing around 11:56 A.M. in New York.

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Burberry financial results

According to Burberry, its revenue increased 15% to £604 million for the third quarter ended December 31.

Burberry said its comparable sales increased 8% driven by strong sales of its signature trench coats and cashmere scarves. Analysts expected the company to achieve a 7% growth for the quarter.

Burberry reported that it achieved double-digit growth in the Americas, Europe, Middle East, India and Africa. The company said the disruption in Hong Kong; a high margin market affected its sales results in Asia as it only recorded a single-digit growth.

In a statement, Christopher Bailey, chief creative and executive officer of Burberry said, “We’re pleased to report a strong performance over this important period, during which our teams worked tirelessly to bring the very best of the brand to the customer in our stores and online.”

Bailey emphasized that the 15% retail sales growth reflect their commitment to every element of customer experience from product, marketing to service.

During the quarter, Burberry opened five mainline stores including relocations in Beverly Hills, Tokyo, and its second dedicated beauty store in Seoul. The company also opened two additional concessions in Japan ahead of the expiration of its license by the end of 2015. The company closed four stores during the period.

Business outlook

For the fiscal 2015, Burberry expected its net new space to contribute approximately 5% to its total retail revenue growth.

Burberry expected its wholesale revenue to decline by a mid-single digit percentage at constant exchange rates in the six months to March 31 2015 (excluding beauty).

The company expected its wholesale revenue in beauty segment to grow bu approximately 25% at constant exchange rates in 2015.

Burberry is anticipating that exchange rates would significantly affect its profit in the first half of 2015. The company said it does not expect a material impact on its profit in the second half of the year if the exchange rates remain at current levels.

Burberry expected broadly unchanged revenue from licensing at constant exchange rates in Japan and from global product licenses. The company estimated that its FY15 licensing revenue will decline by around £10 million based on the fluctuations of the sterling/yen rate.